You’re Getting Outside Funding, What Do You Do With It?

Recently I was dealing with a company called Kabbage that arranges and supplies loans to small businesses.

In dealing with them I started thinking about tips that might apply to the businesses in the process of finding funding either to salvage or start a business, specifically how do they take steps to remain competitive in this type of scenario.

I thought about it and what I realized was this.

  1. If a business needs more cash to operate, it’s usually not currently profitable.This may be because it is brand new, going through hard times or some other scenario. But generally speaking, you are looking for funding because there is not enough money coming in to support the activities you are trying to do.
  2. If you don’t make changes to your business, the additional cash flow you secure will eventually run out and you will be back in the same situation but without the ability to get any further outside funding.

So how do you use your inflow of cash to remain competitive in the world of small business?

If you just use it to pay your usual expenses and hope that things turn around, you are hoping yourself into probable bankruptcy.

First and foremost if you are in a dangerous situation you need to change whatever you were doing that got you into that situation in the first place. Usually this includes adjusting your marketing or sales area to ensure that more business is flowing in.

You can use the outside funds to hire staff to revamp your marketing and sales areas, you can invest in outsourcing your marketing and sales, you could even spend it on a marketing or promotional campaign you run yourself.  

The important thing to remember is to change what you were doing that wasn’t working and actually handle the situation that caused you to need the additional cash flow.

Once you have that settled, you should have a pretty good idea of what different actions you had to take to get it turned around or to make it a success.

If you then make these new actions your continuing company policy from that point forward, you will tremendously increase the chances of being able to leverage that loan into solid future expansion for you and your business.

Just remember that you can operate inefficiently on your production lines if you have a large enough volume of leads and sales, but if you don’t have any leads or sales happening, even the most efficient company will sink into bankruptcy. So handle your promotion and marketing first and foremost, then go through and get the efficiency of your production lines handled, then circle back and hit your marketing and promotional lines again.

It’s a winning formula to stay ahead in the game of business. Especially helpful if you are trying to change directions to save a failing company or to boost an existing one to levels never before reached.

Thoughts, questions? Let me know in the comments below.